Jan. 12 (Bloomberg) -- Renewable energy investment rose 5
percent to a record $260 billion last year driven by a surge in
solar developments and increased spending in the U.S., Bloomberg
New Energy Finance said.

New spending on solar energy jumped 36 percent to $136.6
billion in 2011, outpacing the $74.9 billion put into wind
power, the London-based research company said today in a
statement. Spending in the U.S. rose by a third to $55.9
billion, surpassing the 1 percent gain in China to $47.4
billion.

A jump in photovoltaic installations in the U.S. and Europe
overcame a 50 percent decline the price of modules during 2011,
said Michael Liebreich, chief executive of New Energy Finance.
Falling prices made more developments possible and is bringing
closer the date when wind and solar can rival fossil fuels
without subsidies, he said.

“For every equipment company operating at thin or negative
margins, there is an installer who is getting a good deal,”
Liebreich said in the statement. “Rumors of the death of clean
energy have been greatly exaggerated.”

Last year’s growth was the slowest since 2009, when the
financial crisis curbed lending to companies of all kinds and
investment in renewable energy grew 1 percent. Spending bounced
back in 2010, expanding 31 percent to $247 billion, New Energy
Finance said.

‘Challenging Year’

This year “looks like being another challenging year, with
the European financial crisis continuing to fester and the
supply chain working its way out of some fearsome
overcapacity,” Liebreich said.

Three U.S. solar companies including Solyndra LLC went
bankrupt last year, in part because of falling prices triggered
by increasing competition from Chinese manufacturers. European
nations led by Germany and Italy have reduced guaranteed rates
for electricity produced from renewables to keep power prices
from surging during the economic slump.

U.S. clean energy investment beat China for the first time
since 2008, lifted by government support programs for renewable
energy, some of which have expired. A remaining incentive, the
Production Tax Credit, is due to end at the end of the year.

“There will be a rush to get projects completed in 2012,
followed by a slump in investment in 2013” if it expires,
Liebreich said. Earlier today, Vestas Wind Systems A/S, the
world’s biggest turbine maker, said 1,600 jobs at its U.S.
factories may be eliminated if the tax credit is not extended.

Europe Investment

Clean energy investment in Europe rose 3 percent to $100.2
billion, driven by solar installations in Germany and Italy and
offshore wind financings in the North Sea such as the $1.3
billion financing for the 288-megawatt Amrumbank West project.

Public-markets fundraising dropped from $14.2 billion in
2010 to $11.9 billion in 2011 as clean energy company shares
slumped.

The WilderHill New Energy Global Innovation Index, or NEX,
which tracks 97 clean energy shares worldwide, fell 40 percent
last year, hitting in October its lowest since 2003 as
manufacturers faced pressure from falling prices, overcapacity
and competition from Asia, New Energy Finance said.